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Thursday, July 17, 2003

US: Jobs Weakness and Housing Boom

Housing starts are up, and new jobless signings down, but not yet below the 400,000 level. The mystery continues: whither the US economy? One thing is clear housing construction is still playing an important role in the story. Meantime the NBER Business Cycle Dating Committee has finally decided: the recession ended in November 2001. Let's hope that after waiting all this time they actually got it right! Still, I imagine Brad won't be to happy, so much waiting for virtually nothing.

Government data released on Thursday showed housing starts in June jumped to the fastest pace since January, while new weekly claims for jobless benefits fell but were still at high levels. The Commerce Department said housing starts leaped 3.7 percent to a seasonally adjusted 1.803 million annual rate in June as home buyers scurried to take advantage of extremely low mortgage interest rates. The pace was the strongest since January's 1.828 million rate.

"The insistently strong spot in the economy remains bright. There's no weakening there. People are still buying homes and developers building them," said Mark Zandi, chief economist with Economy.com in West Chester, Pennsylvania. But even as the housing starts number boosted hopes the U.S. economy could shift into higher gear in the second half of the year, as many analysts expect, the jobless claims report underscored the lackluster nature of the economy and its 6.4 percent unemployment rate.

The Labor Department (news - web sites) said new claims for unemployment benefits fell more than had been expected, to 412,000 in the week ended July 12 from a revised 441,000 in the prior week. But the report marked the 22nd straight week claims have been above the key 400,000 level. While the decline in jobless claims was welcomed by analysts, they cautioned against taking the report too much to heart. Seasonal shutdowns of auto factories often skew the weekly data in July, making it more difficult to interpret.

"The claims number is from the early July blackout period when the data are not to be trusted," said Sherry Cooper, chief economist at BMO Nesbitt Burns. Although of little comfort to those filing for unemployment benefits, the panel considered the arbiter of U.S. business cycles declared the recession that started in March 2001 lasted only until November 2001. The National Bureau of Economic Research's Business Cycle Dating Committee said the eight-month length of the downturn made it shorter than average.
Source: Yahoo News

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